HANOI (Commodity Online) : Vietnam's banking system witnessed drastic dips in gold deposits during April and May.

According to Vietnam Banking Association, over the last two months, the volume of gold on deposit in banks decreased by 15 percent, or 16,000-20,000 taels.

People have withdrawn their gold deposits and sold gold while the gold prices were high. Further, as deposit interest rates paid for gold have fallen sharply, many people have sold gold for dollars or dong, and deposited the cash at banks at a higher interest rates

Analysts confirm that the quiet gold market and unattractive interest rates banks are paying on gold deposits have induced people not to keep gold any more.

Overall, the volume of gold on deposit in Vietnam's banking system was about 400,000-500,000 taels, but has now dropped to below 300,000 taels.

Commercial banks themselves are indifferent to depositors who withdraw gold deposits, because they have no one to lend to since the Government banned speculative trading in gold early this year.

The gold exchanges have been shuttered and people no longer borrow gold for speculation. The General Statistics Office reports jeweler's gold exports from Vietnam of $800 million in May.

There is been no official estimate of the total amount of gold imported to Vietnam over the years. For many years, Vietnam was once of the world's principal gold importers, including imports through both official and unofficial channels.

According to the State Bank, declared gold imports in 2005-2008 were 281 tons. In 2009, declared gold imports were inconsiderable. In 2010, only SJC has been allowed to import gold, six tons altogether.

The World Gold Council estimates that only 20 to 30 percent of all the gold held by Vietnamese is deposited at banks. The Council believes that 500-600 tons have been imported to Vietnam 'over many years.'

An industry expert calculates that in the last three years, $2.7 billion of gold, some 90 tons, has been exported through official channels, and that the cash has been invested mainly in business ventures.